Gap society as a new narrative of social division in Japan

14.09.2022

Since the turn of the millennium, Japan has been marked by heated political and public debates about a massive increase in inequality and new forms of social exclusion. A new self-perception of Japan as a ‘gap society’ (kakusa shakai) became dominant. This new narrative represents a rupture to the former self-image as a ‘general middle-class society’ (sōchūryū shakai), according to which Japan was an extremely egalitarian society. However, available research and data does neither fully support the assumption of a much more divided Japanese society in recent decades nor a view of an outstanding equal society in the earlier decades. How can we explain these discrepancies between public discourses and measured inequality? To understand the scope of the recent discussions on inequality and the associated reversal in self-perception, it is first necessary to take a closer look at the earlier model of Japan as a general middle-class society.

This general middle-class discourse, which became increasingly dominant from the 1960s onwards, attested to Japan being an almost uniquely equal society in terms of opportunities and outcomes. Thanks to its extremely meritocratic education system, all male students, regardless of their social background, could achieve potentially educational success and thus paving the way to prosperity and social advancement. For women, the model with its clearly delineated gender roles envisaged an ideal life course of its own. They were supposed to marry such a successful man and to support him in his career by managing the household and family on their own. Above all, in their role as mothers, they ensured the educational success of their own children and thus guaranteed the continuation of the family success story across generations. At the same time, however, Japan was considered also as a heaven of equality in terms of income and wealth distribution compared to the free-market West. In this view, Western societies were characterised by income inequality and widespread poverty like the US or UK, or, as in the case of the Scandinavian countries, by low social inequality and strong social security due to an extremely high tax burden and a comprehensive welfare state. In contrast, in the Japanese system, equal income and wealth distribution was generated, according to the self-image, by socially responsible enterprises run almost like families and the associated low wage differentials between managers and workers. Japan thus appeared, according to the narrative of the general middle-class society, to square the circle by successfully combining fair competition and equal opportunities with high social inclusion for all.

In the dominant self-image, Japan was not only an ethnically extremely homogeneous society without significant minorities but was also characterised by social homogeneity and general prosperity in international comparison.

However, not much has remained of this image of Japan as a prime example of growth and equality since 2000, especially in Japan itself. From the mid-1980s onwards, the Japanese economy overheated, which was reflected in very high growth rates combined with unbelievable price increases on the stock and real estate markets. However, the bursting of these speculative bubbles led to decades of economic stagnation and very modest growth from the early 1990s onwards. Especially in comparison to the US, Japan seemed to stand still and steadily lose importance from the 1990s onwards. Even more painful for Japan’s self-image as a global economic power and leading nation in East Asia was the unstoppable rise of the People’s Republic of China, which embarked on an impressive modernisation and overtook Japan in terms of economic power within a few years. Even South Korea was far more successful in its economic development, symbolised by the overtaking of Sony by Samsung. This relative decline undermined Japan’s social self-image as a successful economic nation and led to crisis discourses and demands for comprehensive structural reforms. The reformers’ goal was to liberalise and deregulate the Japanese economy for generating new impulses for growth and innovation by unleashing market forces and increasing social competition through greater individual income differences, following the US and UK neoliberal model. There was talk of ‘evil egalitarianism’ (akubyōdō), which led to a sated attitude and undermined the population’s drive and will to achieve. However, this neoliberal reform agenda also led to a new focus on social inequality. Parallel to the reform debates, a public and later also political discussion on the development of social inequality in Japan began around 2000. The debate culminated in the mid-2000s in the new model of Japan as a gap society, which quickly became the dominant self-perception and displaced the previous discourse of Japan as a general middle-class society. The perception of social structures has shifted extremely with this new model. Japan is now characterised in terms of social inequality by an opening of the social gap, an increasing destabilisation in employment and a growth of impoverished low-income households. The new narrative of Japan as a gap society also led to a questioning of the desirability of a neoliberal realignment of Japanese society and the associated social differentiation and exclusion dynamics.

Based on empirical research, the extent and intensity of the debate on social inequality in Japan is surprising at first glance. Like in nearly all advanced industrial countries, an increase in income inequality can also be identified as a trend in Japan in recent decades. However, this development has been very moderate in international comparison, especially to the income concentration among top earners in liberal, Anglo-Saxon countries. Overall, available data shows no strong income concentration and rather a continuity in levels of social inequality in Japan since the 1980s, especially in comparison to the US or UK. These empirical results are also supported by comparative studies on political economy, which show that in Japan a neoliberal reform programme has only been realised in rudimentary form. More detailed analyses on income distribution attribute the moderate increase in inequality in household incomes primarily to the ageing of the population and a change in the composition of households. Thus, in Japan, it is not the rise in wage differentials and an unleashing of market forces, but rather the higher proportion of older workers and retirees, who have higher income differentials than young workers, as well as the increase in single households and senior-only households that are the main factors behind a certain opening in income differentials between households. However, it has also to be stressed that empirical research also does not support the former model of Japan as a heaven of social equality until the later 1990s. Social inequality from the 1950s onwards was much lower compared to Japan’s modern developments up to the 1930s. Still, in international comparison with the other advanced industrialised countries, Japan had a rather above-average inequality in income distribution in the post-war period. The education system was also by no means a meritocratic ideal in which social origin played no role. On the contrary, recent comparative studies show a relatively strong degree of social reproduction across generational lines for Japan.

How can the discrepancy between the fundamental change in the self-image and dominant discourse on social inequality in Japan despite a relatively strong continuity in social structures be explained? A closer analysis and interpretation of social development reveals clear cracks in the old social fabric, which make the resonance of the model of Japan as a gap society comprehensible. First, the collapse of the basis of the former model of a general middle-class society must be emphasised. This self-image of Japan as a general middle-class society developed from the early 1960s onwards. The first years after the wartime capitulation from 1945 to 1960 were marked not only by comprehensive reforms, but also by intense and sometimes violent disputes about Japan’s new direction. Hayato Ikeda (Prime Minister 1960-1964), however, with his income-doubling plan, not only succeeded in steering the economy to a path of almost double-digit annual growth until the early 1970s, but also decisively defused the conflicts in politics and the labour market. He established shared growth as the new social contract between the conservative elite and the population. In this consensus, the Liberal Democratic Party (LDP) became the guarantor that the population would benefit from the rapid growth of the Japanese economy through increased purchasing power and upward mobility.

In contrast to all large advanced industrial countries in the West, this pact between the LDP and the people continued after the end of the Bretton Woods system and the oil price crisis in the early 1970s. Although also Japanese economic growth subsequently slowed significantly, with almost four percent annual growth, increasing export surpluses, unabated penetration of the high-tech sectors, continued low unemployment and no significant inflation problems, the Japanese economy became a model of success, even for the West. The social upward trend also continued among the population, with the upper middle class of well-educated employees and their families in secure career positions in public administration and large companies expanding strongly during this period. Although the distribution of income may not have been nearly as extraordinarily egalitarian as suggested by the general middle-class model, this was of only secondary importance for self-perception, since the everyday experience of the population was primarily an increase in their own purchasing power, participation in mass consumption and social advancement over generations. To put it bluntly: in daily life, most of the population experienced and realised common growth. The general middle-class society was a reality in everyday life.

However, this shared growth model ended abruptly with the bursting of the speculative bubbles in the early 1990s. From the later 1990s, economic stagnation began to fully impact the labour market and income development. After decades of seemingly unstoppable increases in average household income, it began to decline significantly for a few years and remained at a significantly lower level until the present. In no other advanced industrial country have average incomes stagnated as much as in Japan in recent decades. It may therefore come as no surprise that new existential angst and fears of decline have spread among the middle classes in Japan. In view of their own stagnating income, many from the middle classes are no longer sure whether and to what extent they will remain part of the well-integrated middle of society in the long run. Especially in view of the demand for intensified social competition during the neoliberal reform discussions, many worry whether they themselves or their children will not be among the losers in this struggle.

Moreover, these existential fears are not entirely unfounded. Successful economic development in Japan was accompanied by a welfare model geared towards high growth. Instead of building comprehensive social security systems, resources were invested primarily in generating faster economic development. In other words, in the Japanese growth model, social inclusion was not realised through the establishment of well-developed social safety nets, but through participation in economic growth.

Although social security systems have been further expanded and supplemented in recent decades, especially for the elderly, integration into the Japanese welfare model is still dependent on permanent full-time employment. All other workers, especially women, who do not have a standard employment contract are not comprehensively covered for illness, unemployment, or retirement. Unemployment in Japan has remained at a low level over the last 25 years, especially in comparison to many European economies. However, atypical employment has increased sharply and today affects not only married women who are integrated into the social security system through their regularly employed husbands, but also young, unmarried workers, especially female employees, but also increasingly male employees. These people are heading for very low incomes throughout their working lives and old-age poverty after retirement. This explains the uncertainty far into the middle classes, who fear that they themselves or their children could be drawn into this downward spiral of atypical employment and the associated consequences. It may come as no surprise then that poverty and especially old-age poverty have become the most important topic within the debate on increasing social inequality in Japan in recent years. Almost everyone has the impression that they are walking on very thin ice and could be pushed to the margins of society at any time.

In 2012, the new LDP Prime Minister Shinzo Abe gained international attention as a result of his economic programme, Abenomics. Domestically, too, Abenomics triggered high expectations, as it promised to put Japan back on a common growth path with a new monetary policy to generate inflation, with a stimulation of demand via government investment programmes and with structural reforms to strengthen economic competitiveness as its three main components. The new monetary policy is the innovative, but also very controversial part of this economic programme and includes the promise that Japan could return to the good old days of common growth without painful reforms by reversing a failed monetary policy. However, the results of Abenomics have fallen short of expectations. While the economy has grown steadily under the years of Abe government up to 2020 thanks to increasing exports, this growth has not led to wage increases and thus has not reached people’s wallets. The current Prime Minister Fumio Kishida (in office since October 2021) has recognised the problem of the continued lack of shared growth under Abenomics. One of his proclaimed goals is to establish a new form of capitalism in which the fruits of growth should not be reserved for a few but should benefit everyone as much as possible: ‘Capitalism is not sustainable if it does not belong to everyone.’ This goal, however, has provoked open criticism, especially within the LDP and the business establishment. The proposed measures and reforms to achieve this goal remain vague. The Kishida government is aware of the problem, but it still must prove that it has bright ideas on how to solve it and that it will be able to implement them in the face of resistance, especially from conservative social circles and from its own party. Social division is an important and much discussed topic in Japan for over two decades, which has reached everyday life of most Japanese, and it will remain a focus in the coming years.

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